"I thought the New Zealand government was a bit more relaxed about SMSFs now," Burgess said.

But despite the efforts of Australia's SMSF advocates to educate our officials it seems the uptight attitude prevailed.

What does the NZ government have against SMSFs? Burgess wasn't sure.

SMSFs are highly-regulated, albeit on slightly different terms than their more institutional competitors.

My guess is that NZ officials were concerned that SMSFs would be less inclined than corporate entities to adhere to the rule requiring any KiwiSaver-transferred money to remain under wraps until the beneficiary turned 65 (whereas SMSF members can access their savings as early as 55).

Continued below.

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And while that might be possible, the potential early leakage of KiwiSaver money into the Australian spending economy shouldn't be such a big deal to the NZ government. I don't see that it would be a great incentive (as if any more are needed) to move to Australia.

Burgess rightly complained that excluding SMSFs from KiwiSaver transfers would prevent individuals from accessing one of the most successful retirement savings options open to Australian residents.

The latest statistics reported by the Australian Tax Office show SMSFs had a bumper year, growing almost 8 per cent in the 12 months to June 30, 2012. As at that date there were almost 480,000 SMSFs representing just under 920,000 individuals and about A$440 million (or about one-third of the total Australian superannuation pool).

More KiwiSaver

Burgess told me SPAA would lobby the Australian and NZ governments to reverse the SMSF ban. In fact, he thought the NZ government was already mulling over an SMSF-like option for KiwiSaver.

Some local providers are also expecting the NZ government will eventually devolve more investment responsibility to KiwiSaver members.

Craigs Investment Partners, for example, offers a quasi-SMSF for KiwiSavers, dubbed kiwiStart Select , but it's still a long way from the Australian model.

Interestingly, Graham Duston, head of the investment group that runs the SBS KiwiSaver fund, told me recently the scheme had rewritten its trust deed to allow for more flexible, individual investment selections in the future.

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David is a freelance journalist who has covered the financial services business on both sides of the Tasman for over 15 years. He is the editor of industry website Investment News. David has edited magazines and websites for the financial advice, investment and superannuation industries.